Question

You have been asked to assist the controller of LearnCo in preparing the 20Y2 budgets.

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Sales Budget

The sales budget

One of the major elements of the income statement budget that indicates the quantity of estimated sales and the expected unit selling price.

often uses the prior year’s sales as a starting point, and then sales quantities are revised for various factors such as planned advertising and promotion, projected pricing changes, and expected industry and general economic conditions. LearnCo has completed reviewing its prior year’s sales and has prepared the following sales budget.

After reviewing LearnCo’s sales budget, you note that three numbers have been omitted. The company’s controller has told you that the units sold for the Basic and Deluxe models are expected to be the same. Fill in the missing amounts.

LearnCo
Sales Budget
For the Year Ending December 31, 20Y2
Product	Unit Sales Volume	Unit Selling Price	Total Sales
Basic Abacus		$8.00	$288,000
Deluxe Abacus			432,000
You are in Column LearnCo Sales Budget For the Year Ending December 31, 20Y2 ProductTotals	72,000You are in Column LearnCo Sales Budget For the Year Ending December 31, 20Y2 Unit Sales Volume	You are in Column LearnCo Sales Budget For the Year Ending December 31, 20Y2 Unit Selling Price	$720,000You are in Column LearnCo Sales Budget For the Year Ending December 31, 20Y2 Total Sales

Points:

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Explanation

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Production Budget

The production budget

A budget of estimated unit production.

should be integrated with the sales budget to ensure that production and sales are kept in balance during the year. The production budget estimates the number of units to be manufactured to meet budgeted sales and desired inventory levels.

You note that LearnCo has omitted six numbers from the following production budget and fill in the missing amounts. You may need to use numbers from the sales budget you prepared.

LearnCo
Production Budget
For the Year Ending December 31, 20Y2
	Units Basic	Units Deluxe
Expected units to be sold (from Sales Budget)
Desired ending inventory, December 31, 20Y2	1,000	3,000
Total units available
Estimated beginning inventory, January 1, 20Y2	(1,050)	(2,100)
You are in Column LearnCo Production Budget For the Year Ending December 31, 20Y2Total units to be produced	You are in Column LearnCo Production Budget For the Year Ending December 31, 20Y2	You are in Column LearnCo Production Budget For the Year Ending December 31, 20Y2

Points:

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Explanation

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Direct Materials Purchases Budget

The direct materials purchases budget

A budget that uses the production budget as a starting point to budget materials purchases.

should be integrated with the production budget to ensure that production is not interrupted during the year. This budget estimates the quantities of direct materials to be purchased to support budgeted production, along with desired inventory levels of direct materials.

Before you make any changes to the budget, you review the information in the following Direct Materials Data Table and enter the units to be produced from the Production Budget panel. After scanning the direct materials purchases budget (which follows the Direct Materials Data Table), you observe that LearnCo has omitted quite a few numbers from the budget. Fill in the missing amounts. You may need to use numbers from the Direct Materials Data Table, or from the sales budget and production budget you prepared. When required, round your answers to the nearest dollar.

Direct Materials Data Table
	Wood Pieces	Beads
Packages required per unit:
Basic abacus	1	2
Deluxe abacus	2	3
Cost per package:
Wood pieces	$0.20
Beads	$0.20
Units to be produced (from Production Budget):
Basic abacus
You are in Column Direct Materials Data Table  Deluxe abacus

Points:

LearnCo
Direct Materials Purchases Budget
For the Year Ending December 31, 20Y2
	Direct Materials
	Wood Pieces	Beads	Total
Packages required for production:
Basic abacus
Deluxe abacus
Desired inventory, December 31, 20Y2	2,200	5,000
Total packages available
Estimated inventory, January 1, 20Y2	(3,500)	(4,500)
Total packages to be purchased
Unit price (per package)	x	x
You are in Column LearnCo Direct Materials Purchases Budget For the Year Ending December 31, 20Y2Total direct materials to be purchased	You are in Column LearnCo Direct Materials Purchases Budget For the Year Ending December 31, 20Y2	You are in Column LearnCo Direct Materials Purchases Budget For the Year Ending December 31, 20Y2	$58,310You are in Column LearnCo Direct Materials Purchases Budget For the Year Ending December 31, 20Y2

Points:

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Explanation

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X

Direct Labor Cost Budget

Direct labor needs from the direct labor cost budget

Budget that estimates direct labor hours and related cost needed to support budgeted production.

should be coordinated between the production and personnel departments so that there will be enough labor available for production.

Before you make any changes to the budget, you review the information in the following Direct Labor Data Table and enter the units to be produced from the Production Budget panel. After scanning the Direct Labor Cost Budget (which follows the Direct Labor Data Table), you observe that LearnCo has omitted quite a few numbers from the budget. Fill in the missing amounts. You may need to use numbers from the Direct Labor Data Table, or from the sales budget, production budget, and direct materials purchases budget you prepared. When required, round your answers to the nearest dollar.

Direct Labor Data Table
	Gluing	Assembly
Hours required per unit:
Basic abacus	0.10	0.10
Deluxe abacus	0.10	0.20
Labor hourly rate:
Gluing	$13.00
Assembly	$19.00
Units to be produced (from Production Budget):
Basic abacus
You are in Column Direct Labor Data Table  Deluxe abacus

Points:

LearnCo
Direct Labor Cost Budget
For the Year Ending December 31, 20Y2
	Gluing	Assembly	Total
Hours required for production:
Basic abacus
Deluxe abacus
Total
Hourly rate	x	x
You are in Column LearnCo Direct Labor Cost Budget For the Year Ending December 31, 20Y2Total direct labor cost	You are in Column LearnCo Direct Labor Cost Budget For the Year Ending December 31, 20Y2	You are in Column LearnCo Direct Labor Cost Budget For the Year Ending December 31, 20Y2	$303,230

Answer 1

LearnCo
Sales Budget
For the Year Ending December 31, 20Y2
Product	Unit Sales Volume	Unit Selling Price	Total Sales
Basic Abacus	36000	$                     8	$       288,000
Deluxe Abacus	36000	$                   12	$       432,000
Total	72000		$       720,000

LearnCo
Production Budget
For the Year Ending December 31, 20Y2
	Units Basic	Units Deluxe
Expected units to be sold (from Sales Budget)	36000	36000
Desired ending inventory, December 31, 20Y2	1000	3000
Total units available	37000	39000
Estimated beginning inventory, January 1, 20Y2	-1050	-2100
Units to be produced	35950	36900

LearnCo
Direct Materials Purchases Budget
For the Year Ending December 31, 20Y2
	Direct Materials
	Wood Pieces	Beads	Total
Packages required for production:
Basic abacus	35950	71900
Deluxe abacus	73800	110700
Desired inventory, December 31, 20Y2	2200	5000
Total packages available	111950	187600
Estimated inventory, January 1, 20Y2	-3500	-4500
Total packages to be purchased	108450	183100
Unit price (per package)	$              0.20	$               0.20
Total direct materials to be purchased	$          21,690	$           36,620	$         58,310

LearnCo
Direct Labor Cost Budget
For the Year Ending December 31, 20Y2
	Gluing	Assembly	Total
Hours required for production:
Basic abacus	3595	3595
Deluxe abacus	3690	7380
Total	7285	10975
Hourly rate	$            13.00	$             19.00
Total direct labor cost	$          94,705	$        208,525	$       303,230